Upper Tana-Nairobi Water Fund (Kenya)

The Upper Tana-Nairobi Water Fund (UTNWF) is Africa's first water fund, established in 2015 by The Nature Conservancy in partnership with the Nairobi City Water and Sewerage Company (NCWSC), Kenya Electricity Generating Company (KenGen), the International Centre for Tropical Agriculture (CIAT), and downstream corporates including Coca-Cola and East African Breweries. It was registered as an independent Kenyan trust in September 2021. The Upper Tana watershed supplies 95% of Nairobi's drinking water and powers KenGen's Seven Forks hydropower dams.

To apply the avoided-cost PES principle — financing upstream watershed conservation because preventing degradation at source is cheaper than treating water downstream — by pooling contributions from downstream water users, industry and investors.

The fund supports farmers in adopting sustainable land-management practices, tree planting, and Rainforest Alliance certification for smallholder coffee growers, alongside fruit-tree planting to diversify farmer income.

By 2024, the fund had committed USD 18 million (with USD 25 million in GEF-led co-financing), bringing 73,000 hectares under improved land management, including 36,000 hectares of public forests. More than 50,000 farmers now use sustainable practices, 3.6 million trees have been planted, and 8,500 smallholder coffee farmers hold Rainforest Alliance certification. Farmers planted 1 million fruit trees, which the programme reports has raised local incomes by USD 50 million annually. Hydrological modelling by the Natural Capital Project (Stanford) and FutureWater projects a 50% reduction in sediment concentration and a 15% increase in water yields, generating a projected USD 250,000/year in direct cost savings for NCWSC; a USD 10 million investment is projected to deliver USD 21.5 million in economic benefits over 30 years.

The UTNWF model has since been replicated in more than 35 water funds across Africa and globally, though its most-cited water-quality and cost-saving benefits remain model projections rather than measured outcomes.